Apple is increasingly benefitting from the exodus from feature phones.

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Apple appears to be reaping the benefits as more and more feature phone users trade up to smartphones. The company carved out a huge chunk of AT&T and Verizon smartphone sales for the second quarter of the year, according to financial results released by both companies.

AT&T announced on Tuesday that 62 percent of its total subscribers are using smartphones. The company sold 5.1 million smartphones in the second quarter, representing 77 percent of its postpaid device sales. While iPhone sales are down from the last quarter—a typical slowdown that comes as the prospect for a next-generation model approaches—AT&T sold 3.7 million iPhones, or 73 percent of its smartphones sales in the last three months.

This follows Verizon's announcement that 50 percent of its subscriber base is now using a smartphone, and the company sold 5.9 million total in the second quarter. As with AT&T, iPhone sales declined sequentially, but the 2.7 million iPhones that Verizon sold represent 45 percent of its smartphone sales.

Combined, the iPhone netted 58 percent of smartphone sales from the two largest US carriers, which share two-thirds of the US mobile market. Most of the remaining sales were shared among various Android device makers.

Sprint, which has about one-sixth of the US mobile market, also sells iPhones, though it hasn't announced figures for the second quarter of this year. T-mobile, holding a 10 percent share, still does not offer any Apple devices. Apple did expand iPhone sales late in the quarter by tapping into the pre-paid market, with the iPhone 4S now available from Virgin Mobile and Cricket.

Apple will announce its own quarterly financial results this afternoon, with global iPhone sales expected to top 30 million. Be sure to check Ars for our live coverage of Apple's quarterly call at 4pm CDT.

I think the Android manufacturers are neglecting a large part of their market as they chase ever larger phones: people who don't want phones with screens larger than 4". Such customers are forced to pick subpar low or mid-range devices which have far less features than even an iPhone 4. The latter becomes the smart choice even if one tends towards the Google ecosystem.

I'm not one of these people (my personal preference is nothing larger or smaller than a Galaxy Nexus 4.7" screen), but my fiancé is. Have the Android vendors largely abandoned the female market to Apple? Do they not understand the market? The pandering HTC Rhyme suggests that's a possibility.

Another thought: after seeing the success of Samsung, are the other makers just aping the Galaxy S line? Could they be that lacking of ideas? Actually, that's probably not the right way to look at it. Do they really think just one size fits all? The problem isn't that they're making phones that are too big, but that the smaller phones they make suck really hard. I think they would be well served to have 2-3 hero devices, one in the 4.5"+ range, another in the 3.7-4.3", and then a smaller one in the 3.2-3.5" range. Build them on largely identical platforms, with similar features (obviously, screen resolution can't be universal) and let the user pick the size they want.

Yeah, Last I checked there's a lot more wireless companies selling phones than just ATT and Verizon, sprint hasn't reported any numbers, t-mobile doesn't even sell the iPhone, not to mention plenty of prepaid MVNO's that don't sell iPhone but sell a number of android phones, how 'bout we stop skewing numbers in Apple's favor and admit the truth, as nice as iPhone may be, price wise, it's out of reach of many consumers. (note that doesn't mean Apple's failing, but it also means Android isn't failing either, both are successful products/platforms in different ways, Apple makes Lamborghini and Android is General Motors)

Yeah, Last I checked there's a lot more wireless companies selling phones than just ATT and Verizon, sprint hasn't reported any numbers, t-mobile doesn't even sell the iPhone, not to mention plenty of prepaid MVNO's that don't sell iPhone but sell a number of android phones, how 'bout we stop skewing numbers in Apple's favor and admit the truth, as nice as iPhone may be, price wise, it's out of reach of many consumers. (note that doesn't mean Apple's failing, but it also means Android isn't failing either, both are successful products/platforms in different ways, Apple makes Lamborghini and Android is General Motors)

I don't think that comparison is right. Apple makes a one-size-fits all phone w/ tons of add-ons (apps). Android is a bit of a free-for-all. Keeping going the car analogy: Apple makes Model Ts and Android is every other car on the market. Granted there are some badass t-buckets out there:

Yeah, Last I checked there's a lot more wireless companies selling phones than just ATT and Verizon, sprint hasn't reported any numbers, t-mobile doesn't even sell the iPhone, not to mention plenty of prepaid MVNO's that don't sell iPhone but sell a number of android phones

thanks, most of us would have to read the article to get this information.luckily you broke it out in the comments.

I think the Android manufacturers are neglecting a large part of their market as they chase ever larger phones: people who don't want phones with screens larger than 4". Such customers are forced to pick subpar low or mid-range devices which have far less features than even an iPhone 4. The latter becomes the smart choice even if one tends towards the Google ecosystem.

I'm not one of these people (my personal preference is nothing larger or smaller than a Galaxy Nexus 4.7" screen), but my fiancé is. Have the Android vendors largely abandoned the female market to Apple? Do they not understand the market? The pandering HTC Rhyme suggests that's a possibility.

Another thought: after seeing the success of Samsung, are the other makers just aping the Galaxy S line? Could they be that lacking of ideas? Actually, that's probably not the right way to look at it. Do they really think just one size fits all? The problem isn't that they're making phones that are too big, but that the smaller phones they make suck really hard. I think they would be well served to have 2-3 hero devices, one in the 4.5"+ range, another in the 3.7-4.3", and then a smaller one in the 3.2-3.5" range. Build them on largely identical platforms, with similar features (obviously, screen resolution can't be universal) and let the user pick the size they want.

The HTC incredible 4g or the One S would probably fit the smaller size/quality desired....

I think that if you compare the Apple to any other phone manufacturer (e.g., Samsung, Motorola, HTC...) that Apple comes out on top. On the other hand, if you compare iOS to Android, then Android is presently the dominant OS (many manufacturers vs. just one).

What's astounding about iPhone share is the fact that Apple gets ~50% of the smartphone market while having only designed and manufactured 5 phones. 5 phones, in 5 years. Meanwhile, as mentioned, the remaining market is split up among roughly 847 android phones with their individual R/D, manufacturing and marketing costs. This is why Apple so completely dominates in terms of profit share and why they'll continue to do so even if their share drops well below 50%.

I can't wait until the next quarter's financial reporting when this all gets hashed over again, and all the same points and misunderstandings repeated. And then after that we're into the holiday quarter, and hoo-boy, the discussions will get heated, let me tell you!

Until that time, let's see if this kitty ever makes it to the top of the slide:

Yeah, Last I checked there's a lot more wireless companies selling phones than just ATT and Verizon, sprint hasn't reported any numbers, t-mobile doesn't even sell the iPhone, not to mention plenty of prepaid MVNO's that don't sell iPhone but sell a number of android phones, how 'bout we stop skewing numbers in Apple's favor and admit the truth, as nice as iPhone may be, price wise, it's out of reach of many consumers. (note that doesn't mean Apple's failing, but it also means Android isn't failing either, both are successful products/platforms in different ways, Apple makes Lamborghini and Android is General Motors)

I don't think that comparison is right. Apple makes a one-size-fits all phone w/ tons of add-ons (apps). Android is a bit of a free-for-all. Keeping going the car analogy: Apple makes Model Ts and Android is every other car on the market.

Edit: spelling.

Given how Apple's HW is generally superior (screen density, resolution, GPU performance, CPU performance), it's probably more accurate to say that Apple makes BMWs and Android is every other car on the market. Not the absolute best at everything, but in most things they are better than the average car as well as costing a bit more.

What's astounding about iPhone share is the fact that Apple gets ~50% of the smartphone market while having only designed and manufactured 5 phones. 5 phones, in 5 years. Meanwhile, as mentioned, the remaining market is split up among roughly 847 android phones with their individual R/D, manufacturing and marketing costs. This is why Apple so completely dominates in terms of profit share and why they'll continue to do so even if their share drops well below 50%.

They have an amazing marketing department. Mindshare is really all that matters when you're selling to a mostly tech illiterate public.

I see that Apples tactics of getting its competition banned from selling its devices in the US is working just as planned.

Wonder how they would do if they had to compete fairly.

Apple is not immune to the Capitalist / Corporate urge to destroy one's competition by any means necessary.

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It's also worth noting that Apple believes that the Android OS is an illegal derivative of iOS and that some Android devices are illegal derivatives of iPhone hardware. That is Apple's fundamental basis for challenging the introduction of such technology into the marketplace.

What's astounding about iPhone share is the fact that Apple gets ~50% of the smartphone market while having only designed and manufactured 5 phones. 5 phones, in 5 years. Meanwhile, as mentioned, the remaining market is split up among roughly 847 android phones with their individual R/D, manufacturing and marketing costs. This is why Apple so completely dominates in terms of profit share and why they'll continue to do so even if their share drops well below 50%.

They have an amazing marketing department. Mindshare is really all that matters when you're selling to a mostly tech illiterate public.

So long as their competitors keep telling themselves that, as well, they will keep being outsold by Apple.

I have the same phone for almost past 10 years. Every single time I have decided to upgrade it, I found that none of the options available on the market are decidely better. Take the current situation.

iPhone - not available on T-mobile; I don't want to switch from T-mobile as I believe all other carriers are so expensive that I can't justify spending that much money for my limited cell phone use.

Android; It is pretty much impossible to chose which phone; there are over 100 devices. To make matter simple, you can quickly rule out all but the latest Android version. (Who has the time to go through which previous was just good enough). With the latest (what fruit is it -- jelly bean?) - the deivces are more like a slab than a sleek elegant fit-in-your-shirt-pocket type. MAnufacturers have absolutely no clue, litereally. They are just plain blindly copying Apple - again without thinking anything originally. Google's new nexus (I think Nexus S) seems like the only reasonable choice.

But then, even latest android with latest dual/quad core CPUI still can't get their screen animations as smooth as Apple - something I believe is the result of using Java as an OS. Lack of smoother animation is a deal breaker for me. So android is out.

Palm's OS was good but is a dead end. So are all those other OSes - symbion, etc ...

Windows Phone 7 has good good user experience. But I can't buy it now as it is going to be outdated in a few months time when Windows phone 8 comes in.

Therefore I end up keeping my existing phone - at leat for now; waiting either for iPhone to become available on T-mobile or a sub $300 Windows phone 7 device.

I will be looking for a less-than-four-inch device in february -- I've enjoyed my MT4G, but if there aren't any new android (or maybe WP7/8) phones available that size I'll find myself in the surprising position of considering an iPhone (to then jailbreak, of course).

What's astounding about iPhone share is the fact that Apple gets ~50% of the smartphone market while having only designed and manufactured 5 phones. 5 phones, in 5 years. Meanwhile, as mentioned, the remaining market is split up among roughly 847 android phones with their individual R/D, manufacturing and marketing costs. This is why Apple so completely dominates in terms of profit share and why they'll continue to do so even if their share drops well below 50%.

They have an amazing marketing department. Mindshare is really all that matters when you're selling to a mostly tech illiterate public.

Mindshare, along with a very capable product. Have you ever used one? It's a very good smartphone, and its software library is still better than android's.

I prefer android myself, but have recommended iphones to most relatives that want a smartphone.

What's astounding about iPhone share is the fact that Apple gets ~50% of the smartphone market while having only designed and manufactured 5 phones. 5 phones, in 5 years. Meanwhile, as mentioned, the remaining market is split up among roughly 847 android phones with their individual R/D, manufacturing and marketing costs. This is why Apple so completely dominates in terms of profit share and why they'll continue to do so even if their share drops well below 50%.

They have an amazing marketing department. Mindshare is really all that matters when you're selling to a mostly tech illiterate public.

Mindshare, along with a very capable product. Have you ever used one? It's a very good smartphone, and its software library is still better than android's.

I prefer android myself, but have recommended iphones to most relatives that want a smartphone.

It's an adequate device but I don't consider it a "smartphone." It's too Fisher-Price for that. Then again, I'm the kind of person that likes seeing how things work in addition to expecting them to work. That said, I'll probably be picking one up for the wife in September when the 5, or whatever, comes out.

Edit: Just remembered, I forced my mom to get one so she wouldn't call me for tech support. She loves it, even if she doesn't really know how to use it.

It's an adequate device but I don't consider it a "smartphone." It's too Fisher-Price for that. Then again, I'm the kind of person that likes seeing how things work in addition to expecting them to work. That said, I'll probably be picking one up for the wife in September when the 5, or whatever, comes out.

I think it's success is due to the fact that you, and plenty of others including the CEOs of RIM, Palm, Nokia, and Microsoft, don't consider them smartphones.

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Edit: Just remembered, I forced my mom to get one so she wouldn't call me for tech support. She loves it, even if she doesn't really know how to use it.

Yes, well, she loves it because she does know how to use it. She just doesn't care that she doesn't use it the way you do.

What's astounding about iPhone share is the fact that Apple gets ~50% of the smartphone market while having only designed and manufactured 5 phones. 5 phones, in 5 years. Meanwhile, as mentioned, the remaining market is split up among roughly 847 android phones with their individual R/D, manufacturing and marketing costs. This is why Apple so completely dominates in terms of profit share and why they'll continue to do so even if their share drops well below 50%.

They have an amazing marketing department. Mindshare is really all that matters when you're selling to a mostly tech illiterate public.

Actually, it seems to be the other way around. When we look at things like web-surfing, purchasing apps etc. etc. we see that iPhone is leading in those metrics, even though Android has more devices out there. So it seems that iPhone-users are using their phones like smartphones, whereas large share of Android-users are using their phone as a glorified feature-phone.

This article is wishful thinking (but we know Chris is an Apple fan). In fact, the results show nearly a TEN PERCENT DECREASE in iPhone sales over the previous two quarters, as a percentage of smartphones sold at AT&T.

The key to properly analyzing financial results is to look at trends, and attempt to learn from them. AT&T is a great bellweather for the iPhone since, until last year, it was the only carrier offering it.

ATT iPhone sales as a percentage of smartphone sales was 81% for the 4th quarter of 2011, a huge phone upgrade period over the holidays, where ATT sold 9.4 million smartphones.

ATT 1st QUARTER 2012 indicated 5.5 million smartphone activations, with 4.3 million of them iPhones (slightly more than 78%).

The most recent quarter results (as noted in the article) indicated iPhones sales of 3.7 million of 5.1 million smartphones activated (%72%).

Numbers don't lie. They indicate a sizeable DROP of nearly TEN PERCENT in the share of AT&T iPhone activations (compared to other smartphones) over the past 2 quarters. And we must keep in mind this was at the carrier where most iPhone owners still reside. The fact that there was so little churn (roughly 1.0%) indicates that users weren't jumping ship to get an iPhone with another carrier. It indicates new users are increasingly selecting Android phones (even some iPhone users switching).

Industry-wide, Android is taking smartphone share away from the iPhone, with 51% of smartphone activations, as opposed to 33% for iPhone.

It's an adequate device but I don't consider it a "smartphone." It's too Fisher-Price for that. Then again, I'm the kind of person that likes seeing how things work in addition to expecting them to work. That said, I'll probably be picking one up for the wife in September when the 5, or whatever, comes out.

Edit: Just remembered, I forced my mom to get one so she wouldn't call me for tech support. She loves it, even if she doesn't really know how to use it.

I guess the myth was that you couldn't save money buying your own phone and going to a cheaper plan, but whatever truth there might have been to that is long gone. The plans are cheaper, and without subsidies to hide the real costs, cheaper devices matter.

What's astounding about iPhone share is the fact that Apple gets ~50% of the smartphone market while having only designed and manufactured 5 phones. 5 phones, in 5 years. Meanwhile, as mentioned, the remaining market is split up among roughly 847 android phones with their individual R/D, manufacturing and marketing costs. This is why Apple so completely dominates in terms of profit share and why they'll continue to do so even if their share drops well below 50%.

They have an amazing marketing department. Mindshare is really all that matters when you're selling to a mostly tech illiterate public.

Mindshare, along with a very capable product. Have you ever used one? It's a very good smartphone, and its software library is still better than android's.

I prefer android myself, but have recommended iphones to most relatives that want a smartphone.

It's an adequate device but I don't consider it a "smartphone." It's too Fisher-Price for that. Then again, I'm the kind of person that likes seeing how things work in addition to expecting them to work. That said, I'll probably be picking one up for the wife in September when the 5, or whatever, comes out.

Edit: Just remembered, I forced my mom to get one so she wouldn't call me for tech support. She loves it, even if she doesn't really know how to use it.

This article is wishful thinking (but we know Chris is an Apple fan). In fact, the results show nearly a TEN PERCENT DECREASE in iPhone sales over the previous two quarters, as a percentage of smartphones sold at AT&T.

The key to properly analyzing financial results is to look at trends, and attempt to learn from them. AT&T is a great bellweather for the iPhone since, until last year, it was the only carrier offering it.

ATT iPhone sales as a percentage of smartphone sales was 81% for the 4th quarter of 2011, a huge phone upgrade period over the holidays, where ATT sold 9.4 million smartphones.

ATT 1st QUARTER 2012 indicated 5.5 million smartphone activations, with 4.3 million of them iPhones (slightly more than 78%).

The most recent quarter results (as noted in the article) indicated iPhones sales of 3.7 million of 5.1 million smartphones activated (%72%).

Numbers don't lie. They indicate a sizeable DROP of nearly TEN PERCENT in the share of AT&T iPhone activations (compared to other smartphones) over the past 2 quarters. […]

Don't you think at least part of the quarter-over-quarter decline can be attributed to the fact that there is almost a year since the last iPhone model was released? To me it seems like standard consumer behavior that most products experience.

It's an adequate device but I don't consider it a "smartphone." It's too Fisher-Price for that. Then again, I'm the kind of person that likes seeing how things work in addition to expecting them to work. That said, I'll probably be picking one up for the wife in September when the 5, or whatever, comes out.

I think it's success is due to the fact that you, and plenty of others including the CEOs of RIM, Palm, Nokia, and Microsoft, don't consider them smartphones.

Quote:

Edit: Just remembered, I forced my mom to get one so she wouldn't call me for tech support. She loves it, even if she doesn't really know how to use it.

Yes, well, she loves it because she does know how to use it. She just doesn't care that she doesn't use it the way you do.

No, she really doesn't know what she doing on that thing. I forbade her from getting a Galaxy S2 because she would have managed to implode the internet with it. As it stands, she can receive calls and texts and use w/e apps her friends have told her about. But when it comes to sending texts, she sends them to her entire address book, almost every time. She figured out how to change ringtones, that made me proud, her old phone had the same stock ringer for 3 years. At any rate, it does what it was designed to do, nothing more, nothing less. Some people ARE okay with that. I'm not one of those people. Will I recommend the phone to children and tech-illiterate aged individuals? Sure thing.

It's an adequate device but I don't consider it a "smartphone." It's too Fisher-Price for that. Then again, I'm the kind of person that likes seeing how things work in addition to expecting them to work. That said, I'll probably be picking one up for the wife in September when the 5, or whatever, comes out.

Edit: Just remembered, I forced my mom to get one so she wouldn't call me for tech support. She loves it, even if she doesn't really know how to use it.

Define "smartphone".

I was thinking the same thing. If by definition a smartphone is one with shorter battery life, is covered in buttons, has a lower resolution screen, isn't running an OS in the UNIX family, can't edit HD video on the device, can't literally change into useful utility devices such as a level, flashlight, recording studio or ereader, has a complicated user interface and is generally more difficult to use, than ok. Upon seeing that definition, i'll be ok with calling the iPhone Fisher Price and removing the smartphone label.

I see that Apples tactics of getting its competition banned from selling its devices in the US is working just as planned.

Wonder how they would do if they had to compete fairly.

Do you really think a sales ban on a single 9-month old phone that lasted about a week (June 30 - July 7) had any material impact on Apple or Android sales? Do you honestly believe someone wanting an Android handset went to Verizon or AT&T with the intent to buy a Nexus Galaxy S, found out it was not for sale and opted for an iPhone?